Intrusion Inc. Announces $7.5 Million Registered Direct Offering

Rhea-AI Summary

Intrusion Inc. (NASDAQ:INTZ) has announced a $7.5 million registered direct offering, comprising 653,000 shares of common stock at $3.05 per share and 1,806,016 prefunded warrants at $3.0499 each. The prefunded warrants are immediately exercisable at $0.0001 per share.

The transaction, expected to close around January 7, 2025, involves a single institutional investor. The company plans to use the proceeds for general corporate purposes, including debt repayment, working capital, capital expenditures, and potential acquisitions.

CEO Tony Scott highlighted that this transaction, combined with recent conversions of Preferred Series A stock to common stock and funds from ATM and SEPA arrangements, should provide sufficient capital through fiscal year 2025 and beyond, eliminating the need for additional capital raising in 2025.

Positive

• Secured $7.5 million in immediate financing
• Funding sufficient through fiscal year 2025
• Elimination of need for additional capital raising in 2025
• Conversion of Preferred Series A stock to common stock

Negative

• Significant shareholder dilution through new share issuance
• Low warrant exercise price of $0.0001 per share
• Existing debt requiring repayment
• Stock sold at $3.05 per share indicating possible discount to market price

Insights

Financial Analyst

The $7.5 million registered direct offering presents a complex financial restructuring for Intrusion Inc. The deal structure combines $3.05 per share common stock and pre-funded warrants at $3.0499, effectively diluting existing shareholders while providing important operational funding. The warrant exercise price of $0.0001 suggests immediate conversion potential, indicating a strategic move to secure committed capital. Converting Series A preferred stock to common stock, combined with ATM and SEPA arrangements, signals a comprehensive capital strategy overhaul. With a market cap of $38 million, this offering represents nearly 20% of the company's value. The CEO's statement about sufficient funding through 2025 is notable, but investors should monitor cash burn rate and operational efficiency metrics. The single institutional investor participation suggests market confidence, though it provides stability compared to a broader public offering.

Tech Industry Analyst

The cybersecurity sector context makes this financing particularly noteworthy. As a cyberattack prevention solutions provider, Intrusion operates in a highly competitive market requiring constant R&D investment to maintain technological relevance. The stated use of proceeds for "general corporate purposes" including potential acquisitions suggests a strategic pivot or expansion possibility. In the rapidly evolving cybersecurity landscape, companies often need substantial capital to develop new solutions or acquire complementary technologies. However, the financing terms and structure indicate potential challenges in attracting investment on more favorable terms, possibly reflecting market skepticism about the company's competitive position or technology roadmap.

PLANO, TX / ACCESSWIRE / January 6, 2025 / Intrusion Inc. (NASDAQ:INTZ) (the "Company"), a leader in cyberattack prevention solutions, today announced that it has entered into a definitive agreement with a single institutional investor for the purchase and sale of 653,000 shares of common stock at a purchase price of $3.05 per share and 1,806,016 prefunded warrants to purchase up to 1,806,016 shares of common stock at a purchase price of $3.0499 per prefunded warrant in a privately negotiated registered direct offering. The prefunded warrants are immediately exercisable at an exercise price of $0.0001 per share of common stock. Aggregate gross proceeds to the Company are expected to be approximately $7.5 million. The transaction is expected to close on or about January 7, 2025.

The Company intends to use the net proceeds for general corporate purposes, which may include, but is not limited to, the repayment of existing indebtedness, working capital, capital expenditures, acquisitions and other investments.

"This transaction, coupled with the actions we have taken over the past several days to convert all of the Preferred Series A stock belonging to a single institutional investor to common stock and the funds raised from our ATM program and SEPA arrangements, ensures that Intrusion has sufficient capital to fund its operations through fiscal year 2025 and beyond, and eliminates the need to raise additional capital in 2025," said Tony Scott, CEO of Intrusion.

Anthony, Linder & Cacomanolis, PLLC is acting as U.S securities counsel to the Company.

The shares described above are being sold by Intrusion Inc. pursuant to a registration statement previously filed with and subsequently declared effective by the Securities and Exchange Commission. A prospectus supplement relating to the offering will be filed with the SEC and will be available on the SEC's website at http://www.sec.gov.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy any of the securities described therein, nor shall there be any sales of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.

About Intrusion Inc.

Intrusion Inc. is a cybersecurity company based in Plano, Texas. The Company offers its customers access to its exclusive threat intelligence database containing the historical data, known associations, and reputational behavior of over 8.5 billion IP addresses. After years of gathering global internet intelligence and working exclusively with government entities, the Company released its first commercial product in 2021. Intrusion Shield is designed to allow businesses to incorporate a Zero Trust, reputation-based security solution into their existing infrastructure. Intrusion Shield observes traffic flow and instantly blocks known malicious or unknown connections from both entering or exiting a network to help protect against Zero-Day and ransomware attacks. Incorporating Intrusion Shield into a network can elevate an organization's overall security posture by enhancing the performance and decision-making of other solutions in its cybersecurity architecture.

Cautionary Statement Regarding Forward-Looking Information

This release may contain certain forward-looking statements, including, without limitation, our expectations for positive results from our recent sales, marketing, and strategic initiatives, which statements reflect management's expectations regarding future events and operating performance. These forward-looking statements speak only as of the date hereof and involve a number of risks and uncertainties, including the risk that our recent sales, marketing, and strategic efforts will not result in increased product awareness or sales of our Intrusion Shield. These statements are made under the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 and involve risks and uncertainties which could cause actual results to differ materially from those in the forward-looking statements, including, the risk that this financing fails to provide the needed capital for the Company to execute its current business strategies, the Company does not achieve the anticipated results from its current sales, marketing, operational, and product development initiatives, as well as risks that we have detailed in the Company's most recent reports on Form 10-K and Form 10-Q, particularly under the heading "Risk Factors."

IR Contact:
Alpha IR Group
Mike Cummings or Josh Carroll
INTZ@alpha-ir.com

SOURCE: Intrusion Inc.

View the original press release on accesswire.com

FAQ

How much did Intrusion Inc. (INTZ) raise in its January 2025 registered direct offering?

Intrusion Inc. raised $7.5 million through a registered direct offering of common stock and prefunded warrants.

What is the exercise price for INTZ's January 2025 prefunded warrants?

The prefunded warrants have an exercise price of $0.0001 per share of common stock.

How many shares and warrants were issued in INTZ's January 2025 offering?

INTZ issued 653,000 shares of common stock and 1,806,016 prefunded warrants.

What will Intrusion Inc. use the January 2025 offering proceeds for?

The proceeds will be used for general corporate purposes, including debt repayment, working capital, capital expenditures, and potential acquisitions.

When is INTZ's January 2025 registered direct offering expected to close?

The offering is expected to close on or about January 7, 2025.